Australian dollar will stay low: Economy roundup

Speaking to currency economists just a few months ago, all the talk was of just how long it would take for the Australian dollar to reach parity with the US. How quickly things change.

Speaking to currency economists just a few months ago, all the talk was of just how long it would take for the Australian dollar to reach parity with the US. How quickly things change.

After reaching a high of US98.49c on 15 July, the Australian dollar has come tumbling back to earth, delivering some much longed-for relief to Australia’s export and tourism sectors.

There are three main reasons for the fall – the improving US dollar, tumbling commodity prices, and the fact that the next interest rates move is now widely considered to be heading down rather than up.

While the current value of the Australian dollar – at midday it is trading at US87.15c – is unlikely to be sustained, several economists see it floating around the US90c mark for the rest of this year.

The lower rate expectations that are feeding into the weaker Australian dollar could be having the reverse affect on auction clearance rates, with stronger results in the biggest markets over the weekend.

In Melbourne 66% of 449 properties up for auction were sold, according to the Real Estate Institute of Victoria, up from 61% last weekend. And Australian Property Monitors data shows Sydney was also strong, with 54% of 188 properties cleared, although conditions in Brisbane and Adelaide were much weaker with 23% and 13% clearance rates respectively.

On the markets today, the S&P/ASX200 is up 0.4% on Friday’s close to 5002.3 at 12.10pm, with a rebound in commodity stocks the key reason for the lift.